Aagam Capital Ltd Management Discussions

Annexure - B

INDUSTRY OVERVIEW

Non- Banking Financial Companies (NBFCs) have played an important role in the Indian Financial System by complementing and competing with banks and by bringing in efficiency and diversity into financial intermediation. NBFCs have evolved considerably in terms of operations, heterogeneity, asset quality and profitability and regulatory architecture.

NBFCs have carved niche business areas for themselves within the financial sector space with innovative products and leveraging the FinTech ecosystem. Owing to a variety of constraints faced by the banking system in intensifying its lending activities the role of NBFCs has become even more significant now.

NBFCs are playing an increasingly important role in Indias financial system. As NBFCs are subjected to enhanced levels of regulation by the Reserve Bank of India, there is a need to provide greater parity in their tax treatment vis-a-vis scheduled banks. The proposals laid down in the Union Budget 2024-25 and the underlying tone of reform, perform and transform would succeed as the Indian economy would step out from the sluggishness witnessed in the past few months. The Union Budget focuses on bringing about several transformational economic reforms. Reiterating the ten points of the Vision for the Decade as envisaged in the Interim Budget, the tax reforms announced were primarily aimed at stimulating growth and promoting digitization and transparency, while simultaneously simplifying tax administration. As emphasized in the Budget Speech by Mrs. Sitharaman, "NBFCs are playing an extremely important role in sustaining consumption demand as well as capital formation in the small and medium industrial segment. NBFCs that are fundamentally sound should continue to get funding from banks and mutual funds without being unduly risk-averse.

OUTLOOK

The Government has taken a series of measures to generate demand and ease the liquidity by ensuring public sector banks lend further to NBFCs, introducing partial credit guarantee scheme, organizing loan mela etc. Outlook for 2025 right now is cautious from an industry point of view, the slowdown that has begun cant be turned around that easily for which a booster shot is required. We do expect demand to pick up as we expect some favorable actions by the Finance Minister in the next budget. These could include a change in personal tax rules in order to put more money in the hands of the common man for a consumption-led revival of the economy, measures to prop up the health and lending abilities of NBFCS, policies to fast track digital adoption etc.

Structurally, the government can make it easier for MSMEs to survive the environment by providing more subsidies to some sectors and build more platforms for small-scale industries to expand. Government should consider relaxing and easing some compliances, for e.g. reforms on taxes or entry requirements for DFIs.

INTERNALCONTROL SYSTEMS

The internal financial controls of the Company are commensurate with its size, scale and complexity of operations. The company has policies and procedures which inter alia ensure integrity in conducting business, timely preparation of reliable information, accuracy and completeness in maintaining accounting records and prevention and detection of frauds and errors. The Audit Committee actively reviews the adequacy and effectiveness of the internal financial control systems and suggests improvements if any to strengthen the same.

HUMAN RESOURCE

Your company believes that people are key assets of the organisation and constantly focusing on attracting, retaining the right talent thereby providing the best opportunities to employees to realise their potential.

FINANCIAL PERFORMANCE

Company face loss of amount Rs. 12.60 lakhs for the period ended 31 st March, 2025 as against loss of Rs. 10.71 lakhs during previous year. The total income of the company decrease from Rs. 3.83 lakhs to Rs. 3.21 lakhs. The EPS of the company for the year under review is Rs. (0.25). Your directors expect and will make more efforts to improve the performance of the company during the current year as compared to previous year.

CAUTIONARY STATEMENT

Management discussion and analysis report contains statements which are forward looking based on assumptions. Actual results may differ from those expressed or implied due to risk and uncertainties. Several factors as listed in this report could make significant difference to the companys operations. Investors therefore are requested to make their own independent judgments and seek professional advice before taking any investment decisions.